Nontraditional Services: Which One Is Right for Your Firm?

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By F. Carter Heim, CPA, CFF, CGMA, MST

Many CPAs seek opportunities to grow their businesses by expanding beyond typical services into nontraditional areas. That’s been a good step for our midsize firm. We feature a mix of services, including audit, accounting, tax compliance and planning. Our nontraditional services include wealth management, financial planning and insurance, as well as litigation support and business valuation.

So how do you expand into nontraditional services? Our move into these areas was organic. Our clients asked us questions based on their changing needs and we adjusted our service lines to best help them meet these needs.

One key thing we learned along the way: Before you jump in, ask yourself some important questions: By adding this new service line, are you creating value? Are you creating a business unit or an opportunity for one person to provide services that you will no longer be able to offer in the absence of that person? Do you currently have, or can you acquire the necessary knowledge and skills to deliver the services competently? It’s not only vital that each new service line adds considerable value to your practice and assists your clients, but it’s also imperative that your firm, as a whole, understands and feels competent in each new addition as well.

Sometimes adding nontraditional services to your practice is a fairly easy process. For example, I led the business valuation and litigation support initiative along with another senior partner and staff who had become certified fraud examiners. While adding this service didn’t require any additional staffing, it did require some new training. In other instances, you may want to add a new service line which requires finding people and expertise outside your firm. For example, on the financial services side, our firm initially entered into an alliance with a financial services firm, but our core values were not aligned. They had a great sales culture, but it was not fully focused on the clients’ best interest. We considered the alternatives and decided on an alliance with a company that focuses only on CPAs and other financial planners. They offer great due diligence, back office support, and subscribe to the core values of our profession.

Two Niches
Litigation services have definitely added to our bottom line and enhanced the value and prestige of our practice in clients’ minds. Our ability to formulate, present and defend expert opinions in a manner that is both clear and persuasive adds significant value and trust to our client relationships. It’s important to note that gaining business in this area depends heavily on your reputation among attorneys, so professional networking and relationship building are important aspects of launching and maintaining this type of service.

Financial services are a common service line addition and will definitely help clients and increase your profits. This niche isn’t driven by hours, but rather by asset management fees and commissions. It’s possible to delegate work to assistants, although you do need a talented champion and leader who can put together a team that creates value. There is more competition in this area, but CPAs can distinguish themselves by emphasizing their objectivity, focusing on what’s best for the client and promoting their broad range of knowledge.

Questions to Consider
Stephen Covey, author of The Seven Habits of Highly Effective People, recommended beginning with the end in mind. Niches often spring up before we’ve considered where we are headed with them. That can be a problem if you’re not thinking about your practice as a business and about what you want to create.

Ask yourself:

What kinds of staff or expertise will we need to make this niche a success?

What kind of training will be required to get us started?

Will this niche generate more work we can delegate?

Will it enable partners or other firm leaders to perform work that has the highest value?

How does this niche fit with our long-term strategic plans?

What’s best for your firm? Think about your end goal and work from there to determine how best to achieve it.

F. Carter Heim, CPA, CFF, CGMA, MST, is president and shareholder of HeimLantz, a medium sized firm in Annapolis, MD.